Cortex Announces Fiscal Q3 2012 Financial Results

CALGARY, ALBERTA--(Marketwire - June 20, 2012) - Cortex Business Solutions Inc. ("Cortex" or the "Company") (TSX VENTURE:CBX) is pleased to announce the Company's quarter ended April 30th 2012 ("Q3 2012") Financial and Operational Highlights. Complete financials and MD&A are available on Sedar (www.sedar.com)

The Company has completed the on boarding of 17 buying organizations to the Cortex Trading Partner Network (the "Network") by the end of April 30, 2012. In addition, there are 13 buying organizations in the queue to go live; for a total of 30 buying organizations signed to transact on the Network. At the end of Q2 2012 the Company had 16 buying organizations on boarded and 6 in the queue for a total of 22. This was the most successful quarter in terms of contracting new buying organizations in the Company's history.

Fiscal 2011

Fiscal 2012

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Revenue

Total Revenue and finance income

$

731,573

$

765,781

$

776,285

$

844,756

$

1,204,692

$

1,109,782

$

1,368,409

Expenses

Total Expenses

$

3,230,899

$

3,350,963

$

3,030,304

$

3,055,165

$

3,269,883

$

3,673,210

$

3,743,181

Net Income (loss)

$

(2,499,326

)

$

(2,585,182

)

$

(2,254,019

)

$

(2,210,409

)

$

(2,065,191

)

$

(2,563,428

)

$

(2,374,772

)

The addition of the buying organizations and the contracted suppliers over the last three and nine months ended April 30, 2012 have resulted in revenue growth in the recurring, access and usage fee revenue stream. The revenue table below illustrates the three and nine months ended April 30, 2012 comparatives with the following highlights:

The three month period Q3 2012 grew 64% over the three month period Q3 2011 ($432,949) and the nine month period Q3 2012 grew 65% over the nine month period Q3 2011 ($1,163,579).

Integration fees is a new revenue stream segregated out this year as it has become a material revenue item. This stream has grown 100% during the three and nine month period ended April 30, 2012, $171,893 and $492,085, respectively.

Set-up fees had a slight decline of 8% and 31% over the three and nine month periods. This decline is not expected to continue however; this revenue stream does fluctuate.

Overall revenue for the three months ended April 30, 2012 is up 78% ($596,964) over the same three month period ended April 30, 2011 while the nine month period grew 63% ($1,418,283) for the nine month period year over year.

Three Months ended Apr 30 2012

Nine Months ended Apr 30 2012

Cortex Revenue

2012

2011

$ Change

% Increase (Decrease

)

2012

2011

$ Change

% Increase (Decrease

)

Access and usage fees

$

1,104,353

$

671,404

$

432,949

64

%

$

2,965,931

$

1,802,352

$

1,163,579

65

%

Integration fees

$

171,893

$

-

$

171,893

100

%

$

492,085

$

-

$

492,085

100

%

Set-up fees

$

87,438

$

95,316

$

(7,878

)

(8

)%

$

193,917

$

281,298

$

(87,381

)

(31

)%

Project management

$

-

$

-

$

-

0

%

$

-

$

150,000

$

(150,000

)

(100

)%

Total Revenue

$

1,363,684

$

766,720

$

596,964

78

%

$

3,651,933

$

2,233,650

$

1,418,283

63

%

Finance income

$

4,725

$

9,565

$

(4,840

)

(51

)%

$

30,950

$

39,989

$

(9,039

)

(23

)%

Total Revenue and finance income

$

1,368,409

$

776,285

$

592,124

76

%

$

3,682,883

$

2,273,639

$

1,409,244

62

%

To highlight the revenue trends over the last seven quarters the below table depicts the trends in each of the revenue streams. The Company is focusing on driving the recurring revenue number, which can be seen in the consistent quarter over quarter increase. In addition, the project management stream is no longer a strategic focus and has been eliminated over the last seven quarters.

Fiscal July 31 2011

Fiscal July 31 2012

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Access and usage fees

$

529,060

$

601,888

$

671,404

$

710,626

$

885,725

$

975,853

$

1,104,353

Integration fees *

Nil

Nil

Nil

Nil

$

251,914

$

68,278

$

171,893

Set-up fees

$

96,054

$

89,928

$

95,316

$

118,229

$

51,374

$

55,105

$

87,438

Project management

$

90,000

$

60,000

Nil

Nil

Nil

Nil

Nil

Total Revenue

$

715,114

$

751,816

$

766,720

$

828,855

$

1,189,013

$

1,099,236

$

1,363,684

Finance income

$

16,459

$

13,965

$

9,565

$

15,901

$

15,679

$

10,546

$

4,725

Total revenue and finance income

$

731,573

$

765,781

$

776,285

$

844,756

$

1,204,692

$

1,109,782

$

1,368,409

The Company continues to monitor its expenses with a focus on revenue generating expenses. Some expenses, by their nature, will grow as the Company executes its business strategy; such as commissions, recruitment costs and other selling costs. The commission and recruiting costs are included in the salaries, employee benefits and subcontract line. The Company was successful in signing buying organizations in Q3 resulting in increased commissions and therefore salaries, employee benefits and subcontracts. Costs specific to the projects the Company has underway are seen under the market expansion and product development line. These expenses have started to reduce with their peak being Q2 2012 reducing 19% in Q3. Some key highlights are:

Overall expense growth Q3 over Q2 2012 was 2%.

A 19% reduction in market expansion and product development expenses

Overall salaries, employee benefits and subcontract increased Q3 over Q2 2012 by 10% or $217K. Included in this amount are an increase in commissions from increased Hub sales, an increase in non cash compensation and non recurring recruiting costs.

Building on the strong start to fiscal 2012, Cortex continues to expand the Network by adding buying organizations (Hubs) and their supplier groups through current and new partnerships in the coming quarters. Cortex will explore new revenue, industry and partnership opportunities in Canada and the U.S.

Organic Network growth, both in the number of customers connected and the number of transactions they do, has provided a solid revenue foundation for the Company. Management expects to see an acceleration of Hub signing in fiscal 2012 and exit the fiscal year with over 31 Hub customers.

Partnerships with Full Circle, Basware, Verian Technologies and Powervision are providing numerous opportunities to add buying organizations in both Canada and the U.S.

Management is investing in market expansion and product development to incorporate new technology in our core service, expanding sales efforts in both Canada and the U.S. and into new industries. These investments are important for accelerating growth of the Network and will provide significant opportunities for the Company in the future.

The validation of Cortex Solutions in the marketplace together with a strong statement of financial position has increased the credibility and acceptance of the Cortex Solution resulting in numerous opportunities to expand.

With the addition of multiple buying organizations to the Cortex Network, management expects the growth of access and usage fee revenue stream to accelerate. The U.S. expansion is contributing to significant increases in customers connected to the Network with over 2,600 suppliers (or 36%) now connected in the U.S. and a strong pipeline of U.S. hubs.

Cortex is also starting to experience the "network effect", with customers transacting with multiple buying organizations on the Network. Recurring revenue growth has accelerated and management expects this to continue for fiscal 2012.

In the next 6 months, management expects to complete more partnerships, announce more buying organizations joining the Network in both Canada and the U.S. and continue increasing recurring revenue.

The Company has received approval from the TSX Venture Exchange for the issuance of 250,000 common shares to employees, including 100,000 to insiders of the Company. 150,000 common shares are being issued in alignment with our employee performance management program on the sale of a buying organization into the Network with the remaining 100,000 common shares being issued as part of an incentive bonus for joining the Company after a year of service. These shares will be issued on June 21, 2012. In addition, the Company has applied to the TSX Venture Exchange for approval of 200,000 common shares to an employee under the terms of their letter of offer. In addition, the Company has awarded 950,000 stock options to insiders in alignment with annual Board Compensation for their upcoming term.

About Cortex Business Solutions

Cortex Business Solutions Inc. is a leading eCommerce service company that improves efficiencies, reduces costs and streamlines procurement and supply chain processes for its customers. Accessing the Cortex Network enhances the exchange of business critical documents, such as purchase orders, receipts and invoices resulting in improved cash flow management and business controls, while reducing day's outstanding and administrative costs. Cortex is a low cost, low risk solution that can be implemented quickly by leveraging its customers existing business environment - evolving business. For more information please visit our website at www.cortex.net.

Forward-Looking Statements

Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading "Risk Factors" and elsewhere in the Company's periodic filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume the obligation to update any forward-looking statement.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.